Will your bank release money to pay the redundancy entitlements of workers?

A recent dispute between 150 former Pumpkin Patch employees (whose positions were made redundant when the company was liquidated this February) and the bank, ANZ, has highlighted how company structures can put banks ahead of retrenched workers when it comes to deciding where the last of the money goes.

In a shock to Pumpkin Patch former workers and managers, the bank has reportedly refused, so far, to pay the redundancy entitlements of head office and distribution workers, because, it says, it is, itself, one of the company’s main creditors and it’s owed a lot of money. Interestingly, some staff did receive their redundancy pay – these were the retail staff whose redundancy entitlements were funded out of the sale of stock. Why the discrepancy? It seems that the company’s legal structure has impacted the issue of entitlements. Pumpkin Patch Originals owned the retail assets and Pumpkin Patch Limited the head office and distribution functions (which, having no assets to sell, failed to pay the redundancy entitlements). The bank insists that its debt takes first priority.

What can HR Managers do? Some HR Managers and Directors may have a seat at the executive table and may be able to spot such issues as a potential problem before such a scenario arises. In most cases, this is beyond the scope of the HR Manager, who is likely to also be out of a job and be waiting in the hope of receiving redundancy pay. HR Managers can obtain more information about how to plan and manage redundancy at the Outplacement Adelaide free information session on 29th March.

There is some good news for workers from failed companies in Adelaide – although their company can’t provide a proper outplacement service, there are currently free workshops available for retrenched workers (and those at risk of retrenchment), run by a reputable outplacement services provider. Details can be found here on the Outplacement Adelaide website.